Accounting Multiple Choice Question – 24 May 2020

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting
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Goodwill may arise in a company’s financial statements if. . .?

Select ONE answer:

  1. the company acquires another company for more than the fair value of its separable net assets.
  2. the company sells a fixed asset at a profit.
  3. the market value of its shares exceeds their nominal (par) value.
  4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct
  2. Not correct – If a company sells a fixed asset at a profit. the asset and the depreciation on it (if any) are removed from the balance sheet. the money received is added to the bank balance and the profit is shown in the profit and loss account. An asset disposal account is used to record the above.
  3. Not correct – The market value of most companies’ shares exceeds their nominal (par) value. However, as the market value is not shown in the financial statements this is of no significance from this point of view.
  4. Not correct

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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